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CxHR Measurement Tetris

CxHR Measurement Tetris

The argument for proactively managing the customer experience of HR (CxHR) is clear: organisations who successfully deliver on the ‘moments that matter’ (such as recruitment, onboarding, relocation, life event etc.) can positively influence employee engagement, with tangible benefits to retention and discretionary effort. For the more transactional interactions with HR services, HR should deliver an ‘effortless experience’. By removing friction from transactional processes, we can safeguard employee productivity and avoid damaging employee engagement.

While the business case for managing the employee experience has largely been accepted (a recent Deloitte Study suggests that 80% of executives believe it to be very important or important) a crucial question remains. How do we measure experience?

For the eagle eyed, you will notice that I have talked about two types of experience: (i) CxHR and (ii) the overall employee experience. It is important to make a distinction between the two as their scope differs significantly. For a more detailed explanation please visit our earlier Article. For the time being, one should associate CxHR with the levers that HR has direct control over (the HR functional experience). In contrast, the employee experience includes levers which often sit beyond HR’s remit (such as the workplace) and therefore are more difficult for the HR function to influence. We argue that HR should start with the things that it fully owns, as indicated by the graphic below.

 

Customer Experience as a Construct

If you are one of the organisations riding the CxHR wave, then you have probably asked yourself the following question: what do we actually mean by customer experience? We understand that it involves seeking feedback from candidates / employees / alumni when they interact with HR’s services, but it isn’t as straight forward as asking the question ‘hello Mr / Mrs employee, what was your experience when interacting with our career site?’ (if only…)

There is a vast array of thinking and opinion on this topic – the word ‘fragmented’ comes to mind. Nevertheless, scholars and practitioners seem to agree that customer experience is a multidimensional construct involving social, sensorial, behavioural, emotional and cognitive components[1]. That said, there doesn’t appear to be a measurement scale which covers all of these elements holistically. So where do we start?

First of all, the vast majority of research in this space has been conducted at the business – customer level. We are, therefore, in relatively unchartered territory when it comes to measuring the customer experience of internal HR services. There are, however, a number of principles which can inform our thinking.

Customer Satisfaction (CSAT)

In a fantastic article, Lemon and Verhoef[2] note that it is useful to compare customer experience with other customer focussed constructs, such as CSAT. They suggest that CSAT is a key component of the customer experience construct, reflecting the customer’s cognitive evaluation of the experience.

Building on this, CSAT is generally considered to be the result of a direct comparison between actual delivered performance verses the customer’s expectation. The outcome of this comparison (if positive) has been empirically shown to improve satisfaction, which is linked to improved firm performance.

Here lies our first CxHR measurement hypothesis. If we can measure the satisfaction of HR customers at the touchpoint level, then we can use that information to optimize the touchpoint and improve the experience during moments that matter. In turn, this will drive the outcomes mentioned at the start of this article (intent to stay, discretionary effort).

Practically speaking, the exact wording of the CSAT question and the corresponding rating system used in surveys tends to differ from organisation to organisation. This means that there is no industry-standard way to measure CSAT. A few commonly used questions include:

– Were you satisfied with ….? (Yes/No)

– On a scale of 1-10, how satisfied are you with ….?

– How would you rate your satisfaction with ….? (very unsatisfied, unsatisfied, satisfied, very satisfied etc)

 

Net Promotor Score (NPS)

While CSAT is an entrenched measurement practice, new measures have been suggested as an alternative such as Fred Reichheld’s[3] NPS measurement, a measure of customer loyalty. A word search for “NPS” within the majority of large company investor reports is almost guaranteed to yield results. While the academic / practitioner landscape is once again fragmented, many argue that NPS is more intuitive and forward looking than CSAT.

NPS is calculated by asking the following question: on a scale, how likely is it that you would recommend our company/ product/ service to a friend or colleague? Respondents answer the question with a number from 0 to 10, with 0 being extremely unlikely and 10 being extremely likely.

NPS scores are divided into three brackets: (i) 0-6 are considered detractors: customers who are unhappy and can damage a brand; (ii) – 7-8 are passives: satisfied but unenthusiastic customers; and (iii) – 9-10 are promoters: loyal enthusiasts who will fuel growth.

NPS is calculated by subtracting the percentage difference between the promoters and the detractors. Companies can score anywhere from -100 to 100.

While some argue that NPS is a better predictor of behaviour than CSAT, research by the likes of De Haan, Verhoef and Wiesel[4] suggest that the predictive power of CSAT and NPS for customer retention are similar. Interestingly, they note that combining both metrics improves predictive performance. This brings me to our second measurement hypothesis.

If we can measure the NPS of HR customers at the touchpoint level, then we can use that information to optimize the touchpoint and improve the experience during moments that matter. In turn, this will drive the outcomes mentioned at the start of this article (intent to stay, discretionary effort).

As recommended by De Hann, Verhoef and Wiesel, there is a benefit to combining both CSAT and NPS within a single measurement strategy. There is also a significant need to ask the free text question, ‘why have you given this score?’. Qualitative data will add the context and explanation needed to make tangible improvements at the touchpoint and journey levels.

 

Customer Effort Score (CES)

When it comes to HR’s services it is important to reiterate the distinction between moments that matter and transactional interactions. Moments that matter shape the employee’s opinion of the company and impact their engagement. Transactional interactions (which could include activities such as updating the payroll system) are less likely to represent a defining moment. That said, they can take up employee time and cause frustration if poorly delivered and should therefore represent an ‘effortless service’. With this in mind allow me to introduce our third measurement – Customer Effort Score (CES).

The simple logic behind CES is that service organisations can create loyal customers by decreasing effort. CEB, now Gartner, authors of the research which sits behind CES, found that 96% of customers reporting high-effort experiences became more disloyal in the future, compared with only 9% of those with low-effort experiences.

Early criticism of the work (inconsistent interpretation of the scale, poor language translation of the word ‘effort’) resulted in further research and validation. Today, we sit with the following measurement approach.

‘To what extent do you agree or disagree with the following statement:

The company made it easy for me to handle my issue.

1. Strongly disagree 2. Disagree 3 Somewhat disagree 4. Neither agree nor disagree. 5. Somewhat agree 6. Agree 7. Strongly Agree’

When applied to transactional HR activities, we do not necessarily believe that we can improve employee loyalty to the company by improving the ease of a payroll interaction. Companies do not typically have competing HR services either, so the employee does not have the option to choose one HR provider over another. We do however believe that a consistently poor service will reinforce an employee’s perception that their company is slow and cumbersome. This could damage an employee’s intent to stay and discretionary effort. There is also a logical link between slow and frustrating HR service interactions and reduced employee productivity. Our third hypothesis follows. If we can reduce the level of effort required to interact with HR’s transactional services, we can a) safeguard employee engagement and b) improve productivity.

 

A Game of Measurement Tetris?

In summary of the above, it feels like we are playing a game of measurement Tetris. Our objective is to build a concrete view of CxHR by combining a variety of measurement approaches. In this article we have introduced primary measurement sources such as NPS, CSAT and CES. It is equally important however to consider secondary sources. These could include click-through-rates on the employee portal, or portion of service tickets that are opened and closed by employees in one session using a career management app. We argue that it is through a combination of both primary and secondary sources which will create a holistic picture of CxHR. There will be more to come on secondary data in our next measurement article.

 

CxHR Measurement Solution – how will it work in practice?

A group of progressive HR organisations (co-creators) are developing a measurement solution which will allow organisations to capture the ‘in the moment’ experience of HR customers as they interact with the organisation’s HR products and services. Having identified the HR customer journeys and critical touchpoints that underpin them, the solution will deploy a ‘one-click’ survey via the organisation’s preferred channel. The survey will capture primary feedback through three individual CSAT, NPS and free text questions. The tool will ingest the anonymous data and provide companies with benchmarking and raw data sets, which can be used to improve critical touchpoints during moments that matter. Future iterations of the tool will incorporate CES data to ensure that HR provides an effortless customer experience at the transactional service level.

 

Closing Thought

Needless to say, we are excited about the potential of this tool which will no doubt evolve as we move forwards. Lisa Randal, a leading theoretical physicist, argues that it is through the speculation and exploration of ideas, beyond what we know with certainty, that we can achieve progress. While CxHR measurement may be unchartered territory, it is certainly worth the time and the effort to explore. Watch this space.

 

 

[1] Schmitt, Bernd H. (1999), Experiential Marketing. New York: The Free Press. ——— (2003), Customer Experience Management: A Revolutionary Approach to Connecting with Your Customers. New York: The Free Press

[2] Lemon, K.N. and Verhoef, P.C., 2016. Understanding customer experience throughout the customer journey. Journal of Marketing80(6), pp.69-96.

[3] Reichheld, Frederick F. (2003), “The One Number You Need to Grow,” Harvard Business Review, 81 (December), 46–55.

[4] De Haan, Evert, P.K. Kannan, Peter C. Verhoef, and Thorsten Wiesel (2015), “The Role of Mobile Devices in the Online Customer Journey,” MSI Working Paper No. 15-124. Cambridge, MA: Marketing Science Institute.

 

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